The State Bank of Vietnam has ordered banks to lower deposit rates by at least 0.5% per year for terms of six months or more. It set out the requirement in document No. 9608, issued on 18 October 2026, on operational solutions for credit institutions. The central bank also prohibits banks absolutely from engaging in unfair competition to raise deposit rates, which it said could destabilise financial and monetary security.
Under the directive, banks must cut listed annual deposit rates for maturities of six months or longer by at least 0.5 percentage points. They must also reduce annual lending rates for production, business and priority sectors by 1.5 to 2 percentage points. Commercial banks were further instructed to mobilise resources, cut operating costs, share profits and implement coordinated measures to bring down overall interest rates.
RATES WERE RISING BEFORE THE DIRECTIVE
Before the directive, banks had been competing to increase interest rates, as seen on 15 October. On 16 October, VND and USD interest rates showed divergent movements. Short-term interbank interest rates had decreased on 14 October.
CREDIT STEERED TOWARDS PRIORITY SECTORS
The central bank urged lenders to channel credit into key economic projects and priority sectors, including science and technology, digital transformation, green development and education. At the same time it wants tighter lending controls in high-risk areas, particularly real estate.
Credit institutions must implement solutions to direct credit capital towards production and business sectors, priority sectors and drivers of economic growth. They must also provide credit for key projects and sectors that need to be encouraged, as directed by the Government and the Prime Minister.
On funding, institutions must regularly review their capital structure and diversify fundraising channels. They are to control liquidity risk and maturity mismatch by strictly limiting the use of short-term capital for medium and long-term lending, and raise the proportion of medium and long-term capital.
TIGHTER CONTROLS ON RISK AND LENDING
The State Bank of Vietnam requires credit institutions to strictly control lending to sectors with potential risks and to customers or groups of customers with large outstanding loans. Particular attention should go to groups that own more than 5% of the customer's charter capital, share collateral, have a common collateral owner, concentrate capital in the same project or have a common source of repayment.
Lenders must also regularly review, inspect and audit internal regulations and credit products. They are to improve the quality of appraisal and promptly detect and handle cases where customers provide dishonest information or use loan funds for purposes other than those intended.
Institutions must review internal rules on loan classification and provisioning to prevent the concealment of bad debts or delays in recognising risk. Risk provisions must be set aside fully and promptly in accordance with regulations.
PENALTIES FOR NON-COMPLIANCE
Credit institutions that fail to comply with directives on interest rates, or engage in unfair competition that destabilises the market, will have their credit growth targets for the remainder of 2026 reviewed. They will be assigned lower targets for 2027 and must also implement one or more safety ratios higher than the prescribed level.